THE NATIONAL ASSET Management Agency has insisted it only allows developers to be released from personal guarantees after it has gotten “all possible value” from them – and then only when it can replace the guarantee with a commercial deal.
A NAMA spokesman confirmed to TheJournal.ie this afternoon that the agency did consider allowing developers to escape their personal guarantees, it only ever did so “on a case by case basis”.
“The Agency has repeatedly stated that it does not engage in debt forgiveness and that remains the position. The Agency pursues all personal guarantees to the greatest extent feasible,” the spokesman said.
The comments came after Michael Noonan told the Dáil that NAMA had a policy of considering releasing developers from their personal guarantees two years after the value of their assets had been realised.
Personal guarantees were commonly used by developers as collateral for their companies’ loans from larger banks, with the prevailing logic being that the individual developer would agree to repay the money personally if their companies turned out to be unable to do so.
In a response to a parliamentary question carried on the NAMAwinelake blog, Noonan said NAMA had not paid banks for the personal guarantees attached to the loans it bought from them, because it “did not consider that such guarantees had any residual value in the vast majority of cases”.
Noonan further added that the agency would consider revisiting this policy in light of the new personal insolvency legislation currently being prepared by justice minister Alan Shatter.
This afternoon, however, the NAMA spokesperson elaborated to say that debtors were only released from these guarantees whenever a more profitable replacement was put in place.
“A debtor will only be released from a personal guarantee in return for a commercial agreement that will generate a better return for the taxpayer than would have been available from the personal guarantee,” the spokesman said, adding:
In addition, the Agency insists that no such arrangements can be implemented until a minimum period of two years has elapsed since all the debtor’s assets have been realised and the debtor has fully cooperated with NAMA.
Both Noonan and the NAMA spokesman declined to indicate the number of cases in which personal guarantees had been released.